Investments

How should we manage a non-profit endowment?

I’ve been tasked with watching over the endowment for a non-profit and I am wondering what is an appropriate asset allocation for the investments?

Suddenly Managing Millions

Being a fiduciary is a serious responsibility that many board member lack the preparation or training to fulfill properly. Here are some resources which we recommend boards tasked with overseeing an endowment consider reading:

But perhaps the most helpful and practical guide is the “Prudent Practices for Investment Stewards” available at fi360.com. It contains very specific advice as well as general principles such as:

An investment strategy can fail by being too conservative as well as too aggressive. A Steward could adopt a very safe investment strategy by keeping a portfolio in cash, but then see the portfolio’s purchasing power whither under inflation. Or a Steward could implement a long-term growth strategy that overexposes a portfolio to equities, when a more conservative fixed-income strategy would have been sufficient to cover the identified goals and objectives.

Finally, to quote the handbook: “An Investment Steward is required to prudently manage investment decisions, and should seek assistance from outside professional such as Investment Advisors and Investment Managers if the Steward lacks the requisite knowledge (assuming trust documents permits the delegation of investment responsibilities).”

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818...)